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Member, Beacon International Group, Ltd.
More than half of Canadian employers plan to reduce retiree medical benefits, but the vast majority of employers remain committed to providing the benefit, according to a new survey.
A study by Hewitt Associates' Canadian division found that 53% of employers plan to reduce retiree health care benefits in the next three years by adopting stricter eligibility requirements, eliminating or capping medical services or increasing retirees' shares of health care costs. Employers cited rising health care costs, accounting costs and the large number of employees planning to retire in the next decade as the key reasons for such changes.
Only 4% of employers, though, said they would eliminate the benefit entirely, while 43% said they would not make any changes.
The survey also found that most Canadian employers (63%) have not decided how they would respond to the development of a private health care system in Canada. Of those companies that have decided, 59% said they do not intend to cover the costs of private health care under any circumstance. This question relates to last year's Supreme Court of Canada decision that struck down Quebec's ban on private health insurance for services provided by the public system (BI, Feb. 20).
The survey featured responses from 218 Canadian employers.
A copy of the Hewitt study, "Postretirement Health Care Benefits in Canada 2006," can be obtained by calling (416) 225-5001 or by e-mailing infocan@hewitt.com.